For more than ten years, we at Jeffrey Burr have been advocating the use of the Nevada trust statutes for asset protection. Unfortunately, although we are pleased with the number of people who have taken this important step in their planning, most of our clients have not taken advantage of the protection offered with this trust which we affectionately call the “Nevada On-Shore Trust” or “NOST”, with the result that when a client comes to us with the prospect of being sued or incurring a large debt due to foreclosure on a property, we are limited in our ability to provide legitimate asset protection beyond a homestead and some other minor exemptions allowed under the law. Some people mistakenly believe that they can implement asset protection strategies after the events have occurred which may result in loss or liability, and we generally explain that although it is possible that some strategies will work, it is also possible that any post-loss strategies may be set aside by a judgment creditor. It is always best to have bought the fire insurance before the house is discovered to be on fire.
The exciting feature of protection of assets through the Nevada On-Shore Trust is that you protect the asset instead of merely insuring against a loss. While insurance has its place, it is impossible to insure against all risks. That is why it is important to not only insure against risk, but to insure the assets against a judgment or other liability not covered by insurance. Nevada law provides that once the NOST has been funded (i.e. after assets have been transferred to the trust) the assets are protected from future creditors after those assets have been held in the trust for two years. And even though creditors are prevented from accessing the assets of the NOST, the trustee of the NOST may generally make distributions to the beneficiaries without regard to the existing creditors. This is in sharp contrast to a limited liability company or limited partnership where although assets might not be reachable by creditors, the assets are effectively frozen within the LLC or partnership.
During the last three years we have seen “adjustments” in asset valuations which most of us would never have expected. The time to prepare for the unknown future is now. We recommend all of our clients, and those who wish to become our clients, speak with one of the attorneys at Jeffrey Burr and take advantage of the Nevada On-Shore Trust today.
In Nevada’s most recent legislative session, significant changes were made to NRS 166,Nevada’s statute governing asset protection trusts. We believe these changes, which became effective on October 1, 2009, further validate Nevada’s asset protection trusts, or Nevada On-shore Trusts (NOSTs), as legitimate and effective asset protection and wealth preservation tools.
Some highlights of the recent changes to the statute are as follows:
As a reminder, Nevada’s asset protection trust statute has been in place for nearly ten years. Nevada is commonly recognized as not only a pioneer in the area of asset protection, but one of the most favorable asset protection jurisdictions in the country. Other states are now joining Nevada and a handful of other jurisdictions to provide the same asset protection techniques Nevada offers to its residents. Fortunately, as a front runner in the industry, Nevada is a seasoned veteran in the field of asset protection and wealth preservation. Consequently, those who formed Asset Protection Trusts early on are now reaping the benefits of increased protection. We remain confident that Nevada’s Asset Protection Trusts are one of the most effective asset protection tools available.
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